Wifi will work with any wifi source; it's an international standard.
The phone is very different though. As above, the phone is locked to O2's network in the UK. You'll pay huge roaming fees if you use it elsewhere on that sim card.
Here's what I'd do: buy a cheap phone that's unlocked, that you can text and call from. Then buy an iPod Touch. The iPod Touch has all the features of the iPhone, just without the phone stuff.
That way, if your iPod gets nicked, you'll still have a phone to drop back on.
Also, there is a Skype app for iPhone and iPod Touch, and you can use a microphone with the Touch to make free (or very cheap) calls from wifi.